The Quick Read: A refinance ends PMI only if the new loan is at or below 80% of the new appraised value. Your old balance and your original purchase price stop mattering once you start over with a new loan. A new appraisal, or a lender’s valuation waiver, sets the value. A refinance also brings closing costs and a new rate and term, so it is often not a more affordable way out of PMI.
Key Takeaways
- A refinance tests the new loan amount against the new value. Mortgage insurance is required above 80% LTV, so a new loan at or below 80% carries none.
- Your servicer can often cancel PMI on the existing loan with no refinance. That route uses the current balance against a current valuation.
- The lender or an appraisal management company orders the appraisal. A mortgage broker cannot order it for you.
- A waiver offer can skip the appraisal. It does not mean the value will support dropping PMI.
- Rolling closing costs into the new loan raises the loan amount, which can push you back over 80%.
Do You Need to Refinance to End PMI?
Usually not. Most borrower-paid PMI on conventional loans can end through a cancellation request to the servicer. Refinancing is one of three exits, and it is the only one that replaces your whole mortgage.
Refinance savings and break-even estimate
The starting figures are an example value with a balance in proportion and a placeholder for costs. Replace them with yours, and enter the current rate from your statement.
Editable benchmark: 7.32% as of October 22, 2026 · Freddie Mac 30-year average via FRED®. A conventional market reference, not a refinance quote.
Illustrative starting assumptions: a $350,000 home value, a $245,000 current balance, a current rate you enter and a remaining term seeded at twenty-five years, closing costs seeded at $5,000 as an editable placeholder (not a fee quote) and rolled into the new loan, a thirty-year term at the current Freddie Mac benchmark, and property taxes and insurance estimated at typical national rates. Every field is editable.
Illustrative estimate only — not a Loan Estimate, approval, quote, or commitment to lend. The new rate field carries the weekly Freddie Mac thirty-year conventional benchmark, a market reference and not a refinance quote; a refinance is priced by the lender at lock, and the current rate, the remaining term and the closing costs are figures you enter. The current payment is estimated from the balance, the current rate and the remaining term; the break-even divides the closing costs by the monthly saving and ignores the interest effect of a longer term. On the VA IRRRL the funding fee is added to the loan unless the veteran is exempt. Taxes and insurance are editable estimates. Licensed in sixteen states for consumer mortgages; Lendmire is a broker, never the lender.
The three exits work like this:
1. Automatic termination. The servicer ends PMI on a set schedule. Your home's rising value does not move that date.
2. Borrower-requested cancellation. You ask in writing once you reach 80% of the original value, with a good payment history and no subordinate liens.
3. Refinance. A new lender orders a valuation. If the new loan lands at or below 80% of that value, the new loan has no mortgage insurance.
The first two work on the loan you already have. Only the third resets everything. That includes your rate, your term, your closing costs and your credit review.
Lendmire's conventional loan programs are arranged through wholesale lenders. Across those programs, mortgage insurance is required above 80% LTV. The borrower may request cancellation at 80% of the original value. Cancellation is automatic at 78%. These are program figures, subject to lender guidelines and full file review.
So the real question is not "can I get rid of PMI?" It is "which route costs less for my loan?" A home that has appreciated a lot may clear the bar on the existing loan with a single valuation. A refinance can still win if you also want a different rate or term. Without that second goal, a refinance is often too much machinery for the job.
Key Terms Defined
LTV (loan-to-value). The loan balance divided by the home's value, shown as a percentage.
Original value. The lower of the purchase price or the appraised value when you first got the loan. Cancellation rights under federal law use this number.
Current value. What the home is worth now, as shown by an appraisal or a broker price opinion. Investor rules for current-value cancellation use this number.
Seasoning. How long the loan has been in place. Younger loans face tighter LTV limits for current-value cancellation.
Servicer. The company you send your payment to. It decides cancellation requests. It may not be the lender that made the loan.
Value acceptance (appraisal waiver). An offer that lets a lender skip the appraisal on certain refinances. The lender's automated system issues it. You and your broker do not choose it.
Which Value Counts? It Depends on the Route
Three different values can matter, depending on the route:
- Original value for the federal 80% request right and the 78% automatic rule.
- Current value for a servicer's cancellation under investor rules.
- New appraised value for a refinance.
This is where many homeowners get stuck. Say your home has gained a lot of value. Your balance may still sit above 80% of the original value, so the federal request right does not apply yet. The federal rules allow lenders and servicers to use their own standards, per the CFPB's guidance on removing PMI. Investor current-value rules are one such standard. That is how appreciation can end PMI on the existing loan.
Three Routes Compared
| Factor | Auto termination | Servicer cancellation | Refinance |
|---|---|---|---|
| Value used | Original schedule | Original or current | New appraised value |
| Who starts it | The servicer | You, in writing | You, with a lender |
| Valuation | None | Appraisal or BPO | Appraisal or waiver |
| Loan changes | None | None | New loan, rate, term |
| Main cost | None | Valuation fee | Closing costs |
Caution: costs vary by lender and loan. Compare them on a Loan Estimate.
How a Refinance Appraisal Decides PMI
The new loan amount divided by the appraised value is the number that decides it. If that number is 80% or less, the new loan has no mortgage insurance. If it is higher, mortgage insurance applies again, and you have restarted the clock.
Here is the step-by-step flow:
1. The lender orders a valuation. This is usually an appraisal. Sometimes the lender's automated system offers value acceptance instead.
2. The appraiser reports an opinion of value. The comparable sales carry the most weight. Condition and updates matter too.
3. The lender reviews the appraisal. The lender must make sure it reflects market value and that the appraiser's reasoning is supported. Fannie Mae's valuation FAQ describes that standard.
4. The new LTV is calculated. This uses the new loan amount, including any closing costs rolled in.
5. You decide. You compare the payment with PMI against the payment after the refinance, including any change in rate and term.
Two details deserve attention. First, appraiser independence rules do not allow a lender to accept an appraisal ordered by a mortgage broker, loan officer or real estate agent. Lendmire is a broker, so it does not order your appraisal. The lender or an appraisal management company does. A broker who promises to "order the appraisal" is describing something the rules do not allow.
Second, a rate-and-term refinance can go well above 80% LTV. Across the wholesale programs Lendmire places files with, it reaches 95% on a one-unit principal residence, and 97% where the existing loan is agency-owned and the first-time-buyer program allows it. Mortgage insurance applies above 80%. A refinance at 95% therefore swaps old PMI for new PMI. It does not end it. Terms depend on the lender's guidelines, the property type, the leverage, and a full review of the credit profile.
Waivers and Alternative Valuations
Value acceptance lets lenders sell certain eligible refinances without an appraisal. For a refinance, the value is the lender's or borrower's estimate. The offer comes from the automated underwriting system, which uses collateral data to set the minimum due diligence. The offer is the system's decision, not yours.
A waiver saves you the appraisal fee and the visit. It does not tell you the home is worth enough to drop PMI. The estimated value may be more conservative than you expected. The new loan's LTV still decides whether PMI applies. If you are counting on a high value to clear 80%, ask the lender early whether a waiver is likely. Ask whether you can still request a full appraisal.
Cancelling on the Existing Loan Without Refinancing
For many homeowners, this is the cheaper route. It works like this:
1. Check your PMI disclosure from closing, or ask the servicer how it handles requests.
2. Send a request. The federal request right requires writing. Fannie Mae allows a written or verbal request for current-value cancellation. Ask your servicer which it takes.
3. The servicer checks your payment history and liens. A recent late payment can block the request. An open HELOC or other junior lien can block it too.
4. The servicer orders a valuation. This is usually a broker price opinion or an appraisal, and you typically pay for it.
5. The servicer compares your balance to the value. If the valuation meets the threshold, PMI ends. If it falls short, the request is denied unless you pay down the balance enough to meet the threshold.
Fannie Mae's servicing guide on terminating mortgage insurance separates automatic termination, request on original value and request on current value. The limit is tighter in the early years of a loan and looser once it has seasoned. If the value increase came from substantial improvements, the seasoning requirement can be waived. The value must then come from a valuation done after the work is finished. The improvements must also meet local zoning and building codes.
One recent change is worth knowing about. A Fannie Mae lender letter now permits servicers to contact borrowers who may be eligible for current-value termination. Earlier guide text said servicers could not solicit these requests. Think of the letter as outreach permission. It is not a new right, and it does not change the LTV thresholds. If your servicer calls, compare the offer with a refinance before you act.
Worked Examples
These examples are illustrative and not tied to any real loan. They use percentages of value to show how the test plays out.
Example 1: The value rose enough. A refinance appraisal comes in far above the purchase price. The new loan, closing costs included, is 72% of the new value. That is below 80%, so the new loan has no mortgage insurance. The question left is whether the new rate and term, plus closing costs, beat staying put.
Example 2: Borderline. The new loan comes to 82% of the appraised value once closing costs are rolled in. Mortgage insurance would still apply. Your options:
- Bring cash to closing to cut the balance below 80%.
- Skip rolling in the costs, if the program allows.
- Drop the refinance and ask your servicer to cancel on current value instead.
The third option may cost far less if your existing loan has seasoned enough.
Example 3: The appraisal comes in low. You expected a value that gives a new loan at 78%. The appraisal supports a lower value, and the LTV lands at 85%. A refinance would now carry new PMI. You have already paid for the appraisal. Review the report for factual errors. A request for reconsideration of value is a normal step, but it works only when you can point to specific, verifiable comparable sales. Otherwise, wait, or pay down the balance.
| Case | New LTV | PMI on new loan? | Next move |
|---|---|---|---|
| Value rose enough | 72% | No | Run the break-even |
| Borderline | 82% | Yes | Pay down or cancel instead |
| Low appraisal | 85% | Yes | Review, wait or pay down |
What If the Appraisal Comes In Low?
A low appraisal does not undo your existing loan. It only means this valuation will not support a refinance without PMI. Start with the report itself. Check square footage, bedroom and bath counts, and finished space. A factual error is the strongest basis for a reconsideration request.
Reconsideration is not an appeal you can count on. The appraiser looks at the evidence, and the lender decides what happens next. Comparable sales that closed near the effective date carry the most weight.
If the number stands, three paths remain. You can pay down the balance. You can wait for more equity. Or you can ask your servicer about cancelling on the existing loan, if the valuation they would order might differ. Do not assume it will. A servicer valuation and a lender appraisal can differ.
How to Prepare Before the Appraiser Visits
- Document improvements. Keep receipts, permits and before-and-after photos for work that added value.
- Gather comparable sales. Recent sales of similar homes nearby help the appraiser see what you see.
- List what changed. Updated kitchens, baths, roofs and systems belong on a short list you can hand over.
- Make the home easy to evaluate. A clean, accessible home lets the appraiser see everything.
- Pay down junior liens. A HELOC can block cancellation, and a refinance may have to pay it off.
None of this guarantees a number. It makes sure the appraiser has the facts.
Where the General Rule Breaks
Loans from before the federal law. The request and automatic rules apply to single-family principal-residence loans that closed on or after July 29, 1999. For older loans, Fannie Mae's guide ties automatic termination to the midpoint of the original amortization period, if you are current.
Second homes, rentals and 2–4 unit homes. The federal protections cover single-family principal residences. For multi-unit and investment properties, investor rules are much stricter on LTV. Occupancy and unit count change the leverage allowed. On a refinance at the program level, a cash-out on a 2–4 unit principal residence is capped at 75%, not 80%.
Cash-out refinances. Pulling cash out lowers the LTV cap to 80% on a one-unit principal residence. The existing first mortgage generally must be at least 12 months old, and a borrower must have been on title for six months. One wholesale lane reaches 89.99% LTV with no mortgage insurance. It requires a 680 score, a 50% ratio ceiling, a thirty-year fixed rate, a primary residence and a conforming balance. It has its own six months of seasoning, and it is not written on Texas homesteads. It is subject to lender guidelines.
Lender-paid MI. Single-premium mortgage insurance is paid up front by the lender. It generally cannot be cancelled later. A refinance is the realistic exit.
FHA loans. FHA mortgage insurance is not PMI, and the cancellation rules differ. A conventional refinance is how many borrowers leave it. The new loan then faces the same test as any other. If it lands above 80% of value, new PMI applies. The FHA lane has its own streamlines for staying inside FHA. Those do not end FHA insurance.
Interest-only periods and balloon loans. Midpoint or final termination may matter more for these loans, per the CFPB's guidance.
Disaster-affected borrowers. Fannie Mae's guide has a separate section on verifying payment records for borrowers affected by a disaster.
Is the Refinance Worth It?
A refinance is worth it when the savings from the new loan exceed the cost of getting it. PMI is one line in that comparison. It is rarely the only one.
Compare these items on the same home:
- Payment with PMI against payment after the refinance, including any change in rate and term.
- Closing costs and any pay-down needed to reach the target LTV.
- How long you plan to stay. A short stay may not recover the costs.
- What a new term does. Restarting a thirty-year schedule lowers the payment but can add years of interest.
The break-even comes from a Loan Estimate, not from a rule of thumb. On the existing-loan route, the cost is usually a valuation fee. That is a much lower bar, so if cancellation is open to you, run that comparison first. Mortgage insurance premiums on conforming loans typically run from 0.58% to 1.86% of the balance a year. That is a published range, not a quote. Your own credit score and LTV decide where you fall.
Credit and ratios matter for a refinance. The wholesale conventional programs start at a 620 decision score. The automated finding governs most files, with a total ratio ceiling of 50%. Subject to lender guidelines and full file review, a weaker credit profile may rule out the refinance route even when the value works.
Step-by-Step: A Sensible Order of Operations
1. Ask your servicer first. Ask for the PMI dates and how they handle current-value requests.
2. Check your liens and payment history. A late payment or HELOC can block cancellation.
3. Estimate your LTV. Use your balance and a realistic view of current value.
4. Decide if you want a new loan anyway. A different loan term or structure changes the math.
5. If so, request a Loan Estimate. Compare the payment before and after, with costs.
6. Let the lender order the valuation. Do not look for a shortcut through a broker or agent.
7. Review the result. Check the new LTV before you commit.
Frequently Asked Questions
Can I end PMI without refinancing if my home value went up?
Often yes. Servicers can cancel on current value under investor rules. You send a request, the servicer orders a valuation, and it compares your balance to the value. Payment history and junior liens matter. Whether it works depends on your loan's age and the threshold your servicer applies.
Does a refinance always require a full appraisal?
No. An automated system can offer value acceptance on certain eligible refinances. That lets the lender skip the appraisal. A waiver does not confirm the value will clear 80% LTV. Ask the lender early what to expect. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Can my mortgage broker order the appraisal?
No. Appraiser independence rules bar a lender from accepting an appraisal ordered by a broker, loan officer or real estate agent. The lender or an appraisal management company orders it. A broker can explain the process and help you prepare.
Will a refinance remove PMI automatically?
Only if the new loan is at or below 80% of the new appraised value. A new loan above 80% carries mortgage insurance again. Closing costs rolled into the loan raise the amount and can push you over the line.
Does PMI drop on its own when my home is worth more?
No. Automatic termination follows the original schedule, not today's value. Appreciation helps only when you ask for current-value cancellation or refinance. A servicer may now contact you about eligibility, but you still have to compare your options.
Next Step
If you are weighing a refinance and want the break-even run on your own numbers, Lendmire can help you compare the programs on the same home. It arranges conventional loans through wholesale lenders, so the lender, not Lendmire, orders the appraisal and makes the decision. All program figures here are subject to lender guidelines and full file review, and nothing here is a commitment to lend.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging FHA, VA, conventional and jumbo purchase and refinance loans through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. CFPB – When can I remove PMI from my loan?
2. Fannie Mae FAQs: Property Valuation
3. Fannie Mae Servicing Guide B-8.1-04: Termination of Conventional Mortgage Insurance
4. Fannie Mae Lender Letter on Mortgage Insurance Termination
This article is part of Lendmire’s conventional loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How to Do a Conventional Cash-Out Refinance After Your Home Value Jumps · How Much Home Value a Conventional Cash-Out Refinance Lets You Borrow · Does a Conventional Cash-Out Refinance Always Require an Appraisal?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.